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Friday, September 20, 2019

Maritime Logistics Professional

September 1, 2019

22 Bulkers Added to Fleet in Q2: Belships

Pic: Belships

Pic: Belships

The dry bulk market for Supramax/Ultramax bulk carriers improved from the first to the second quarter 2019,  said Norway-based Belships.

Measured by the BSI-58 index, earnings averaged USD 8 167 per day (net) – 7 per cent up from the previous quarter,  said the bulk ship operator and management company.

The market reacted strongly as iron ore mines in Brazil started coming back into operation after the tailing dam accident in January. Despite continued turbulence and interference from ongoing trade wars and uncertainties in macroeconomic growth forecasts, the rates have increased significantly in the third quarter and is currently about USD 14 500 per day.

At the end of 2018, 148 Supramax/Ultramax new-buildings were scheduled for delivery in 2019. 22 vessels were added to the fleet during the second quarter whilst only one vessel was recycled.

As of today, only 58 vessels have been delivered. Based on recent years’ annual delivery profile we should not expect more than another 20-25 vessels entering service in 2019. In other words, a significant shortfall compared to the reported order-book.

22 vessels of about 1.3 m dwt have been contracted so far this year. This is less than half the number contracted at this time in 2018 and points towards a historically very low fleet growth in the coming years.

 As the IMO 2020 Sulfur Cap coming into effect in a few months’ time, there is some potential for slow steaming depending on bunkers costs and eventually we expect to see more ships being recycled than at the current rate.

The latest round of stimulus packages in China is starting take effect. Interest rate cuts and other stimulus measures has resulted in surging Chinese credit growth this year. The growth rate is now the highest since 2014.

Since 2010, China credit growth has been leading dry bulk markets by roughly one year. Barring further negative escalations of trade wars, we expect a continued positive market development in 2019 and 2020.

Belships will soon control a fleet of 22 dry bulk carriers and continues to enhance its earnings with a combination of charter backlog and spot exposure.